Investor Report Brazil: Pendulum swings

Currency volatility and exchange rate protectionism are taking their toll on Brazil’s corporates

By Thierry Ogier

In the 13 years since it was first floated,
Brazil’s currency has gone through repeated cycles
of depreciation followed by sharp rebounds.

The wild swings in the real have claimed several corporate
casualties on the way – especially in the aftermath of
the global financial crisis in 2008.

But this time is different, say Brazilian company
executives.

After a long period of appreciation which hurt Brazilian
industry, the real lost ground in the second quarter of the
year against the dollar and other currencies. Local
multinationals, such as Petrobras and Vale, have started to
feel the pinch as much of their debt is denominated in foreign
currencies.

Oil and gas company Queiroz Galvão
Exploração e Produção (QGEP),
recently admitted that it was concerned by the impact of
the...